As a real estate investor, author and podcaster, I’m often asked if it is “too late” to buy real estate. After all, prices have climbed dramatically over the past several years, and many homeowners and investors are worried that they’ve missed their chance.
My answer is always the same: No, it’s not too late.
However, today, unlike the past, when almost every property was a good deal for buyers, you have to hunt for (and buy) only the best. And one specific way to do that is to purchase a property and increase the value significantly. That way, if home values do drop, you’ll avoid being “underwater.”
But how do you add value on a piece of real estate without spending tens of thousands of dollars? While there are potentially hundreds of techniques, here are my favorite ten methods for helping the value of your properties to increase.
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1. Don’t buy stupidly.
While this first item technically does not require you to do anything special to the property, it is nevertheless the most important step in building quick value. If I buy a home for $20,000 less than it’s worth, I’ve forced an appreciation of $20,000. While I don’t need to go into detail explaining exact methods, just know that your profit is made when you buy, not when you sell. For more on finding great deals, read 4 Simple Tips for Finding Incredible Real Estate Deals.
2. Try out the ‘Ikea bedroom miracle.’
One of my favorite ways to quickly improve a property is to simply turn a “bonus room” into a bedroom. The best transformation involves turning a two-bedroom home into a three-bedroom one. Oftentimes. this can be accomplished for the price of an Ikea wardrobe, but can add tens of thousands of dollars to the value of the home.
3. Increase your property’s curb appeal.
It may be obvious but it is still shocking: the number of investors who spend thousands remodeling a home but neglect to do any more to the outside than a quick paint job. While fresh paint is a great way to add value, there are many more steps you can take as well to spruce up a home’s curb appeal. A nicely manicured lawn with well-defined landscaping can help achieve higher rent or a quicker sale — both of which can make the value climb.
4. Raise the rent.
If we’re talking about rentals — especially multifamily properties — raising the rent can be the key to increasing a property’s value. If your rents are low, a small increase can add significant value to your property. This is especially true for multifamily properties. Raising rent just $25 per month per unit on a four-plex can add $1,200 per year in extra income and (depending on your area’s cap rate), up to $20,000 in forced value overnight.
5. Rent out those nooks and crannies.
You may already be at the top of your rental price capacity, but that doesn’t mean you are getting all the income you can out of your properties. Are there any storage sheds, broom closets, garages or simply vacant land that you can rent out to increase your income? Mini-storage is a multimillion dollar industry, and you probably have more space to rent out than you realize. As happens when you raise the rent, additional income often means more value.
6. Increase your fees.
In addition to capitalizing on all the physical ways you can increase the income in your investments, how about the fees? Are you charging for background checks, late-rent fees, missed maintenance appointments or parking violations? How about your laundry facilities or paid parking? Are you getting all the fees you deserve?
7. Lower your expenses.
You are probably paying too much for too many things. As an investor, one of the “hats” you wear is auditor for your business. Perhaps you can negotiate a better rate for garbage pick-up. Perhaps you can transfer the water/sewer/garbage expense to your tenant. Perhaps spending a few hundred dollars getting all those dripping faucets can cut down your annual water bill by thousands of dollars. Whatever your strategy is, if you decrease expenses, you will be able to increase the value of a property.
8. Add a bathroom.
In the old days, one bathroom was standard in most homes. If you are remodeling a home and find this is the case, take note of where the plumbing is located and what extra space there is around, above, or below that plumbing. Oftentimes, you can add a small half bath for several thousand dollars and add tens of thousands in value in the process.
9. Tear down those walls.
As long as a wall is not “load bearing” (and sometimes even if it is), you can take down a wall (or half of one) in a matter of hours and create a much more “open concept” feel. This can help increase the desirability of a home and thus improve the value as well.
10. Paint the neighborhood.
One of the biggest detriments to your property’s value is not your property at all — it’s your neighbor’s home. A quick paint job, landscaping or simply a run to the dump can often be the best money you’ll spend, trying to increase the value on your own property. Obviously some tact is needed and many people are opposed to getting “charity,” but it’s hard to turn down a free paint job or yard clean-up.
So, that’s it: These are just ten of perhaps hundreds of ways you can use to quickly add value to any property you own. Don’t use the “I’m waiting for the market to improve” excuse. You can buy great deals — even in today’s market — if you take the previous steps to add immediate value.
[This article originally appeared on Entrepreneur.com.]
Any items you’d add to this list?
Let me know with a comment!